In Budget 2024, the government allocated $116 million to Inland Revenue to collect tax debt and to ensure Inland Revenue was better equipped to catch tax evaders.
Inland Revenue will use the additional funding to target those who are evading tax, saying it is essential that IRD crack down on anyone who is not paying the tax they are required to.
Inland Revenue has confirmed that funding for the 2024/2025 financial year will be targeted at:
· the hidden economy and organised crime
· electronic sales suppression tools (ESSTs)
· GST integrity
· student loan overseas based borrowers
· increased audit activity.
And cracking down on tax debt, IRD certainly are.
Company liquidations
For 2025, IRD has already applied to liquidate more companies over unpaid taxes than ever before.
A senior IRD officer is reported as saying IRD has recently opened almost 2000 audit cases, more than the number commenced in the July to September quarter of 2024.
Hidden Economy
Inland Revenue investigators have made hundreds of unannounced visits to businesses which they believe are not meeting all their tax obligations as employers. The visits follow on from a liquor store campaign in last year.
Electronic sales suppression tools (ESST) In December 2022, Inland Revenue issued a new Revenue Alert warning of severe consequences for anyone who has or uses Electronic Suppression Software Tools (ESST) to try to evade tax.
An electronic sales suppression tool (ESST) is basically any form of Eftpos or electronic software used to accept payments. IRD say these tools can be used to create two sets
of books so using this software amounts to an aggressive form of tax evasion or money laundering.
Inland Revenue investigators are specifically targeting takeaway outlets across New Zealand where it is thought electronic sales suppression tools are being used to manipulate sales records.
Inland Revenue has already identified a number of customers in New Zealand who may have been exposed to ESS tools. That number is expected to grow significantly. Inland Revenue says it has as many investigations pending as are already underway.
Where IRD identify specific instances of ESS tools being used to evade tax, Inland Revenue will require payment of any evaded tax, plus 150% shortfall penalties and use of money interest.
Where payment is not made, IRD will consider applying for the taxpayer to be put into bankruptcy or liquidation.
IRD may also consider a criminal prosecution for tax crime. https://www.ird.govt.nz/media-releases/2022/tax-evasion-software-prompts-stern-
Ref: https://www.beehive.govt.nz/release/government-provides-support-tackle-tax-debt-and-compliance